China is fast becoming a key market for Apple and other smartphone makers looking to cash-in on the nation’s enormous population. However, the top player in 2013 could come from closer to home. Lenovo is expected to become China’s leading smartphone brand next year, up from its current #2 slot, one research firm announced Tuesday.
According to Gartner, Lenovo’s share of the smartphone market rose to 14.8 percent in the third quarter of this year, a dramatic increase from a year ago, when the company held just 1.7 percent of the market. That puts its Android-powered LePhone within striking distance of Samsung, which is the leading smartphone maker in China with 16.7 percent of the market.
What advantages does Lenovo have? Name-recognition and reasonable pricing, the latter being of the utmost importance in China…
Lenovo is the only local smartphone player that can compete with global top brands in China, thanks to its household brand recognition, nationwide distribution, strong portfolio and reasonable pricing.
Indeed, when it comes to the lower- to mid-priced smartphone, brands such as Apple and Samsung “are less competitive”.
The handset maker’s CEO Yang Yuanqing has said he expects Lenovo to become profitable in “the next couple of quarters”, according to a recent Reuters report. The executive has also noted that the company has passed Huawei and Nokia to become the number two smartphone maker in China.
In another area, China is also catching up to trends in the U.S. and elsewhere.
By 2016, tablet shipments in China will match those of laptop PCs. At the same time, the price of tablets in China are expected to fall to $176 in 2016, down from $262 in 2011, Gartner announced.
It was only a matter of time before a local player took charge of the Chinese smartphone market. Although the market is huge and demand for mobile devices is growing at a time when sales elsewhere are cooling, foreign companies can be tone-deaf as to the requirements of local consumers.
Apple had to be dragged kicking and screaming into offering a less-expensive iPhone, and only then it was an older model. What will count is whether the iPhone maker can bite the bullet and shave off some of its luxuriant profit margin in exchange for growing its market in China.
Also, China’s mobile consumers are not like their Western counterparts who have become accustomed to the latest, largest and most-powerful devices.
Provide a mid-priced smartphone with technology that is “good enough” and Apple has a shot at moving from a dismal 6.9 percent of the country’s market to something that could worry Samsung.
So, are homegrown companies such as Lenovo naturally at an advantage over Apple and other foreigners in China?